Another Insurance Nightmare

Is the man who attacked you on the night of April 12, 1993, in this courtroom?"

Heather Smith hesitated for a moment before taking her eyes off Denver Deputy District Attorney Doug Jackson. Everything she had been through in the past three years--the pain, the nightmares, the self-doubts--hinged on this moment.

The May 6 trial of Thomas Luther, the man she had accused of stabbing her five times and leaving her for dead, had gone as well as could be expected. It had been difficult, especially hearing him whispering, "She's fuckin' lying" as he sat at the defense table a few feet away. Now she turned and looked at Luther, pointed at him and said, "I'm very certain that's him."

It was done, but the worst was yet to come. Luther's defense lawyer Lauren Cleaver had persuaded her client to waive a jury trial because of the publicity that had surrounded his February conviction for the 1993 murder of twenty-year-old Cher Elder. This trial would primarily revolve around Heather's word against Luther's.

It would be up to Denver District Judge Dick Spriggs to decide who was telling the truth. And Cleaver had made it very clear in preliminary hearings that her strategy would be to put Heather's credibility on trial.

When Cleaver got her chance, she attacked. "She basically tried to make me out to be a liar, someone who was out of touch with reality, and that it had somehow been my fault," Heather recalls.

"Her questions were always asked sarcastically. And when I answered, she would roll her eyes and say, 'Oh, really.'"

For more than an hour, Heather was cross-examined. As she sat at the witness stand, she grew angrier. "I was asking myself, 'How many times do I have to be a victim?'" Her own insurance companies had put her through a similar ordeal, even suing her in November 1995 for being "unjustly enriched" after undergoing surgery to fix her neck, broken by the man Cleaver was defending.

"I was so angry," Smith recalls, "I wanted to scream, 'Thomas Luther is the one on trial here. Why do you want to make me look like a bad person?'"

On the night of April 12, 1993, Smith, then 27, had been trying to sell her car to a man with light-colored hair and blue eyes across the street from her home near Washington Park. Instead of writing a check, he stabbed her five times.

At Denver General Hospital, her father filled out the insurance forms. She worked at a moving and storage company that had a policy with American Medical Security, based in Milwaukee, Wisconsin. She had a $3,300 deductible but otherwise was covered, including physical therapy and psychiatric counseling.

Smith was not expected to live but surprised everyone by hanging on. She shocked them again when she walked out of the hospital eight days later and then reported to the Denver Police Department the next day to give her statement to detectives and a description of her attacker to a police sketch artist.

The police had already been working on one possible suspect: a former boyfriend. It was clear from Smith's statement and that of a witness that her ex-boyfriend was not the attacker. However, the police pursued the possibility that her former boyfriend had put someone else up to it. But the police were unable to find any evidence that he was involved, and the case was officially closed--unsolved--a month after the attack.

Smith was left with a half-inch-wide scar that stretched from her collarbone to her stomach, where surgeons had opened her up to treat the internal injuries. More perplexing was a large bump that had formed on the back of her neck; she complained of constant pain there, muscle fatigue and a limited range of motion. She was examined by an orthopedic surgeon a month after the attack, but he said she was fine.

A small portion of her bills was covered by the Victims Compensation Division of the Denver District Attorney's office: $1,500 went for psychiatric counseling; $500 for physical therapy; and $500 to Denver General Hospital.

Smith made arrangements with DGH to make monthly installments for the $3,300 she was liable for. The bulk of the bill (which would eventually total about $60,000 for the surgeries, hospitalization, physical therapy, counseling and other items) was paid by American Medical Security.

In June 1993 the insurance company notified her that it was no longer medically necessary to continue her physical therapy, and it cut her off. The physical therapy clinic allowed her to continue using its equipment on her own and gave her massages for free. "They also made notes of the problems I was still having with my neck," Smith recalls.

In September 1993, trying to find some way to pay for more physical therapy and possibly plastic surgery to fix the scar on her chest, Smith says, she contacted Allstate agent Gregg Johnson. She hoped that a homeowner's policy she had bought from Johnson, who also sold her mother a multi-car insurance policy that included Smith's vehicle, might cover some of the expenses. But Johnson told her the homeowner's insurance wouldn't cover the expenses. "I guess because I wasn't attacked in my home," she says.

Almost a year after the attack, Smith's neck seemed to be getting worse. An avid bike rider before the attack, she had given up the sport because she couldn't lift her head to see where she was going. She had formed a habit when sitting or standing of propping up her head with one hand because her neck muscles were too weak.

On a good note, DGH agreed to forgive a little more than $2,000 that Smith still owed on her deductible because she was the victim of a violent crime. But in March, the company she worked for went out of business, and American Medical Security canceled her insurance policy. Smith would no longer be covered for psychiatric counseling, nor would she be covered for plastic surgery on her scarred chest and back.

Soon after, Smith was listening to a Sunday morning radio talk show on which the subject was no-fault automobile insurance. What caught Smith's attention was the unusual nature of the settlement claims. One man won a claim after a camper he was lifting on to the bed of his truck fell and hurt him. A woman who had been raped in her car had received coverage for her medical expenses.

"I was selling my car, so I wondered if I would be covered," Smith recalls. "All I was hoping for was to be reimbursed for what I had paid on my deductible, about $900, and maybe get some help with plastic surgery."

Smith contacted Allstate agent Johnson. "He said, 'Oh, yeah, we should have been notified about this from the beginning.' I reminded him that he could have said something when I asked him if I was covered under my homeowner's policy. He told Allstate's attorney he couldn't remember us ever having that conversation." (Johnson referred Westword to the Allstate public-relations office, which did not respond to questions.)

Johnson told Smith to contact Allstate claims adjuster Susan Brust. "She said she was sending me a claim form and to get it in right away," Smith says.

Smith returned the form and waited a week before calling Brust. "She said she needed more time," Smith recalls. "I waited two weeks and called again. This time, she said they hadn't received the police report of the incident yet."

Two more weeks went by, Smith recalls, "but she said she still didn't have the report. So I mailed a request to the police on a Thursday and got the report on Monday."

Frustrated, Smith hired an attorney. His paralegals called Brust and were told that a copy of the police report had been received but lost. They faxed her another one.

But the runaround was nothing compared to what she went through in June 1994: a three-hour deposition conducted by Sherwin Wittman, the attorney for Allstate Insurance Company, in the company of Brust.

Wittman made it clear that the company believed that her former boyfriend was responsible and that the act had nothing to do with the use and operation of the car--hence, the company would not have to pay. "[The former boyfriend] may have been the individual who stabbed her or may have been the individual responsible for it," Wittman replied when asked by Smith's lawyer about the relevancy of his questioning.

Out of the blue, Wittman asked what she was wearing the night of the attack. "Like I had gone out to sell my car in a bikini or something," Smith says. "Like I had 'asked for it.'"

As it became clear that the lawyer was questioning Smith's character, she grew angry. "What made it worse was, Susan Brust was sitting there with her arms crossed and rolling her eyes," Smith says. "I would have thought that a woman in particular would have had more empathy for what I had been through."

The attitude of the insurance company only compounded the depression and anxiety Smith was experiencing. It was clear to her that the police were never going to catch her attacker. Her sleep was disturbed by nightmares of being chased and stabbed.

Then, in February 1995, Allstate notified her that it was accepting her claim; she was covered for up to $100,000 in expenses. Smith's attorney told her that he was no longer needed and that any further questions could be dealt with by directly corresponding with the Allstate claims department.

Smith was elated. But a month later, her world was turned upside down again when her psychiatrist showed her a newspaper article about a man who had been arrested for the murder of Cher Elder. When she saw the accompanying photo of Thomas Luther, Smith knew she had found the man who attacked her.

A short time later, she also learned why her neck continued to give her such problems. The blow to her neck had separated two vertebrae; essentially, she had been living for two years with a broken neck. It was vital that she get it fixed, two surgeons advised, because if she suffered the slightest accident, she might be paralyzed for life.

Smith called Allstate to make sure the surgery to fix her neck was covered. A plastic surgeon had told her that there was nothing much that could be done for the scar on her chest, but this was more important anyway. She was told the neck surgery fell under her $100,000 benefits, but just to be sure, she asked the surgeon and St. Anthony's Hospital, where the surgery would be performed, to call Allstate. They, too, were told she was covered. "In fact," she recalls, "Allstate said there was no need for pre-approval."

Life finally seemed to be turning around. She landed a job with Bonfils Blood Center, which provided the blood that had helped save her the night she was stabbed. The Denver district attorney was charging Thomas Luther with first-degree attempted murder. The trial would proceed after he was tried in January 1996 for the murder of Cher Elder.

On June 27, Smith underwent surgery. The vertebrae were carefully returned to their correct position--a move the surgeon had warned carried a risk of paralysis--and platinum plates were inserted to secure the bone.

In July, the bills--$76,000 all told--began to arrive. And so did a notice from Allstate stating the company would not pay.

Apparently, American Medical Security had been corresponding with Allstate and was demanding that it be reimbursed for the approximately $60,000 it had paid out for Smith's trauma surgeries.

Rubbing salt in the wound, in November Allstate filed a claim against Smith and American Medical in U.S. District Court, asking the judge to decide whether American Medical should receive the benefits or if the money should go to pay Smith's bills for the neck surgery.

Smith hired attorney Ronald Podboy, a former Denver deputy district attorney, to represent her. A month later, American Medical Security filed a countersuit against Smith and Allstate claiming that she was being "unjustly enriched" by Allstate paying for her neck surgery.

"Yeah, I tell you," Smith says bitterly, "I really felt unjustly enriched after being stabbed five times, having my neck broken and then having to go through surgery."

American Medical spokeswoman Jennifer Faulhaber, when asked about the company's stance that Heather Smith was being "unjustly enriched," replies, "We will not be making any comments at this time. It is not our policy to comment to newspapers."

At the time, American Medical insisted that it be reimbursed before the bills for the neck surgery were paid. That would leave only $27,000 of the $100,000 (another $13,000 had already been paid for other medical expenses) toward Smith's outstanding debt of $76,000.

Faced with a remaining debt of $49,000 (which didn't include her psychiatric bills or her attorney fees), Smith was warned by Podboy that she might have no other choice than to declare bankruptcy. "For Heather, it was a horrible possibility," Podboy recalls. "Not only because of the technical ramifications--ruining her credit for the next seven, ten years--but it would have been a defeat, a defeat she didn't feel she should be forced to accept just because she was attacked by some maniac.

"And then she was being accused in federal court of being 'unjustly enriched'...by lawyers who jump to the defense of insurance companies who don't want to pay."

In February 1996, Thomas Luther was found guilty in Jefferson County of second-degree murder for Cher Elder's death. Next, it would be Smith's turn to face Luther and his attorney, Lauren Cleaver, who had labeled her accusations "a bogus case."

"I thought that after I survived the assault, nearly losing my life, that things had gotten as bad as they would get," Smith says. "But now I was having to defend my character to the insurance companies and to Lauren Cleaver.

"It was the worst time of my life...even worse than being stabbed five times. I don't think I could ever kill myself, but I certainly thought that life sucked and wondered what I had ever done to deserve this."

Depressed and haunted by nightmares, Smith began to wonder if the things the insurance companies and Cleaver were intimating were true. Maybe she was at fault.

"But one day, I said, 'Enough of this.' I couldn't let the bad guys--Thomas Luther and the insurance companies--beat me. So I made a decision to start trying to get through each day and not worry about tomorrow."

That didn't necessarily sweep away her problems. By April, Smith was resigned to declaring bankruptcy. Podboy had been trying to negotiate with American Medical to accept less. The company's attorney "said that would be like accepting a poke in the eye," Podboy recalls. "I said, 'No, more like a stab in the neck.'" The sarcasm was noted, but the insurance companies weren't budging.

But two weeks before the trial, Bonfils, which is self-insured, offered to pay the outstanding debt for Smith's neck surgery if American Medical and Allstate would agree to pick up the rest.

Bonfils would not consider her broken neck a pre-existing condition. "Besides, we've had enough free advertising out of you," joked Smith's boss, Jackie Campeau, referring to a Bonfils TV spot seeking blood donors that featured Smith talking about her experience.

Podboy went to work to hammer out the agreement between Bonfils and the insurance companies, including asking Allstate to pay attorney fees. "Nothing's signed yet," he says, but he's confident the worst is over. And in the meantime, Podboy and attorney David Greene have filed a malpractice suit on behalf of Smith against the orthopedic surgeon who examined her a month after the attack and failed to notice her broken neck.

"Bonfils was a lifesaver for me...twice," Smith says. "It was a great burden off my shoulders, and that's when I knew that I could get through the trial. Bonfils came through for me when they didn't have to...not Allstate or American Medical, the money-grubbers."

LuAnn Ritchie of the Victims Compensation Division of the Denver District Attorney's office says it isn't unusual for victims of violent crime to be bankrupted by the experience.

"Less than 20 percent are insured at all, unless it's Medicaid or Medicare," she says. "And those that are soon find out that insurance doesn't protect us as much as we'd like to believe."

For instance, she says, most insurance policies have inadequate or no benefits for the psychological counseling crime victims need. "And unless they're employed by a major corporation, most victims' insurance coverage doesn't include dental assistance. But these sorts of crimes often involve head injuries, broken jaws, missing teeth."

Although she is prohibited from discussing specific cases, Ritchie says some insurance companies will try to get out of paying benefits with such claims as the victim didn't notify them on time. Or, companies will argue, as in Smith's case, that the victim somehow was at fault.

The most ludicrous, and most common, of the excuses, Ritchie says, "is when they say, 'We're terribly sorry, but we can't pay because you didn't ask your primary-care physician if it was okay to go to that particular hospital.' Of course, the victim was all bloody and lying on the street and had no real choice, but that doesn't matter: The rules are the rules.

"It would be comical if it wasn't so tragic."
For Heather Smith, the tragedy finally seems to be dissipating. Judge Spriggs, saying that Smith had a "remarkable recollection" of detail, determined that Luther was guilty and sentenced him to 50 years in prison, a term to run consecutively after the 48 years Luther got for killing Cher Elder.

"It was vindication for all the questions from the insurance companies, the cross-examination by Lauren Cleaver, for all the nightmares and pain," Smith says now. "Finally, someone in a position of authority to make a decision about my life believed what I had to say.

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